No, but that's also what would happen when the stock market behaves weirdly enough. It's a good thing, though, that stock markets and foreign exchanges have more trading volume; I'm starting to wonder what happens if a random blokes with a million actual USD wants to game the bitcoin like George Soros did it with the Swedish kroner.
Actually the bigger event around it was the Black Friday in 1992: The Bank of England was hoping/pretending that the pound would stay strong against the FRG Mark, whereas Soros lent a massive amount of pound to other people. When the pound finally devalued, he could fulfill the lendings (at the cheaper pound price). The Swedish currency took similar damage.
Basically, governments trying to stabilize their currency are in danger of losses whenever they meet someone with even deeper pockets. In contrast, the Japanese government could out-trade Soros in the crash in 1987 and Soros had to pocket substantial losses.
I agree. If one ever needed an example of why Mt. Gox or Bitcoin shouldn't be taken seriously. They had a withdrawal limit of $1000 per day, too. This was simply to save one more day of that.
It makes you wonder if Mt. Gox actually had the hard currency to back up everyone's account balance.
The point of an exchange is that you can trade one thing for another. E.g., US dollars for bitcoins.
Mt. Gox seems to act like both an exchange and a brokerage. Presumably people have an "account" in which they can deposit and withdraw various currencies.
"It makes you wonder if The New York Stock Exchange actually had the hard currency to back up everyone's account balance." That doesn't make any sense either.
I guess you don't have an account with any brokers participating in the NYSE or other exchanges. You can't open an account without writing them a check. Once you've given them money, you can trade NYSE stocks which may gain or lose value. But the dollars you deposit into your account you should be able to get them out again with low risk.
Each currency or security should represent a zero-sum balance sheet for the exchange as a whole. Unless Mt. Gox spent the hard cash for themselves and hoped the market for bitcoins stayed healthy.
Who do they think they are, a Wall Street investment bank?
I agree it doesn't make any sense (but for a different reason).
Yes, the NYSE is a building full of member broker dealers who will, in fact, buy shares from you when the proper conditions are met. (I.e., you need to be worth their time).
"Real banks" are highly regulated and in the US are backed up by the US government. I don't know of too many other entities that can handle other people's assets with such low reserve requirements without being considered fraudulent. If there are any, I suspect they're heavily regulated or at least exempted as a speculative private fund.
It doesn't seem very free market to rollback the market and cancel all the free market trades that happened.